JMBM has prevailed in the Court of Appeal on behalf of its client in a well-publicized and hotly-contested development project in the City of Los Angeles. The court's published opinion will come as welcome relief to property owners who got caught in the bureaucratic mire when the City chose to "re-interpret" a half-a-century-year-old ordinance dealing with subdivision proposals to apply to all large hillside lots. However, the lasting impact of the decision will be what the court had to say about the deference a municipal authority is entitled to in connection with the interpretation of city ordinances and regulations.

In the much publicized case of a Saudi Prince seeking to build his residential estate, a unanimous three-judge panel of the Court of Appeal published a decision in which it affirmed a lower court judgment and ruled in favor of the Prince and against the City of Los Angeles, Bruce Karsh and Martha Karsh. In Tower Lane Properties v. City of Los Angeles, Bruce Karsh, Martha Karsh, the appellate court rejected the City and Karsh arguments that the residential project must first file a tentative tract map and undergo environmental and discretionary review before issuance of a building permit.

In reaching its conclusion, the court considered the plain meaning of the subject ordinance (Los Angeles Municipal Code 91.7006.8.2) as well as the City's historical interpretation and application. The court found that the prior owner of the Prince's property has been granted grading permits in 2005 and 2006, and that "...the Karshes obtained grading permits for nine projects on their large hillside property, all without undergoing any environmental review under the Ordinance." The court concluded: "Thus, out of 22 grading permits for properties having hillside grading sites larger than 60,000 square feet, only one required any type of clearance, which was obtained without undergoing any environmental review."

The court rejected the City's efforts to interpret the Ordinance in such a manner as to require the Saudi Prince to undergo environmental review, concluding: "Because the City cannot point to a consistent and long-standing interpretation, its current interpretation is entitled to no deference."

Tower Lane's land use attorney, Benjamin M. Reznik of Jeffer Mangels Butler & Mitchell LLP in Los Angeles, stated that his client, who has been the target of allegedly unfair and at times vicious attacks by local residents and the media, feels completely vindicated by the court ruling. "The City continues to single out the Saudi Prince with new requirements never before applied to other property owners all in an effort to deny him the right to a building permit. This unfair treatment has to stop," said Reznik.

Tower Lane Properties is an entity established by Saudi Prince Abdulazziz ibn Abdulazziz al Saud, who is currently the Deputy Foreign Minister of Saudi Arabia, to develop his family residence in the hills above Benedict Canyon. Next door neighbors Bruce and Martha Karsh have been leading and funding efforts to stop the Saudi Prince.

On February 5, 2013, Jeffer Mangels Butler & Mitchell (JMBM) filed a lawsuit in Los Angeles Superior Court (Case # BS141623) against the City of Los Angeles on behalf of Tower Lane Properties LLP whose beneficial owner is Saudi prince Abdul-Aziz ibn Abdul-Aziz al Saud, the current Deputy Foreign Minister of Saudi Arabia. The lawsuit seeks a writ of mandate to compel the city to issue the building permits and damages in the amount of $25 million caused by the city's allegedly illegal and discriminatory conduct.

LOS ANGELES -- On August 23, 2012, a Los Angeles Superior Court judge ruled that the residential project proposed in the Benedict Canyon area by Saudi prince Abdul-Aziz ibn Abdul-Aziz al Saud, the Deputy Foreign Minister of Saudi Arabia, had been illegally subjected by the City of Los Angeles to rules that are not applicable to the project. [Tower Lane Properties, Inc. v. City of Los Angeles, Los Angeles Superior Court case no. BS137339.]

The rule at issue is City Building Code sec. 91.7006.8.2 which requires projects that are subject to subdivision to apply for a tentative tract map prior to grading on sites greater than 60,000 square feet. The city and certain neighbors argued that this provision is applicable to the Saudi prince's project even though no subdivision was proposed or contemplated. Hence, they argued the project requires a discretionary review and public hearings.

The court found that the code section is not applicable to the project and ordered the city not to apply this provision to the project. The proposed project consists of three single family homes on three separate legal lots on Tower Lane.

Martha and Bruce Karsh, who own a large estate property next door, elected to intervene in the lawsuit. The Karsh's legal arguments regarding the applicability of this code section were also rejected by the court. In papers filed with the court, Tower Lane Properties submitted evidence of city records showing that Martha and Bruce Karsh had pulled numerous grading and building permits for their own property between 2003 to 2010 in order to construct a recreational building, a guest house, a conservatory with basement, and other improvements, and not once did the City subject them to the very same ordinance they argued Tower Lane Properties must adhere to, even though their property is also greater than 60,000 square feet. Tower Lane Properties produced evidence that the city had never before applied this ordinance to an applicant proposing a single family home on a single legal lot.

Martha and Bruce Karsh have been leading opponents of the project who have waged a campaign-style attack against the project and Prince Abdul-Aziz. The City of Los Angeles Ethics Commission website shows that Martha and Bruce Karsh had also hired a team of lobbyists to influence the city processing of this project. Bruce Karsh is one of the co-founders of Oaktree Capital, an international investment and management firm and, according to the Los Angeles Times, the largest creditor of Tribune Co. which owns the Los Angeles Times.

"Our client designed a project to comply with all the zoning and building code regulations, but in response to outside pressures the city devised new interpretations intended to force our client into a lengthy and unnecessary analysis of non-existent issues. This is a residential project which is completely consistent with neighboring properties and will be constructed in compliance with building and grading regulations. Yesterday's detailed and well- reasoned court ruling vindicates our client's position that the City tried to apply its rules in a discriminatory manner," said Benjamin M. Reznik, land use attorney for the Saudi prince. "It is most unfortunate that our client has been vilified by certain members of the community for doing nothing more than insisting that the laws of our city be applied to him fairly in the same manner as they are applied to other homeowners."

Click here to review the court's tentative decision, which became final after the hearing of August 23, 2012.

In an attempt to appease a well-heeled group of neighbors in Benedict Canyon who want to stop one particular project, the City of Los Angeles has adopted a new interpretation of its municipal code which will result in more than $1 billion worth of construction being delayed into 2013. This equates to the loss of several thousand jobs this year.

For the particulars, read my op-ed column from this week's Los Angeles Business Journal, reprinted with permission below.

Why is the City of Los Angeles singling out the Deputy Foreign Minister of Saudi Arabia and forcing him to follow procedures never before imposed on others in order to allow him to build his home in the Benedict Canyon neighborhood of Los Angeles?

That's a question being raised following the recent Vanity Fair article written by Michael Shnayerson, There Goes the Neighborhood, about my client Prince Abdulaziz bin Abdullah bin Abdulaziz al-Saud, the current Deputy Foreign Minister of Saudi Arabia.

For some inexplicable reason, the City of Los Angeles Planning Department is erroneously maintaining and insisting that the Prince's entity developing the project, Tower Lane Properties, Inc., must undergo additional, unnecessary and inapplicable steps in the plan check review process, before the project is cleared for construction. However, other similarly-sized residential projects in Benedict Canyon and nearby neighborhoods were built without being subjected to any such additional review whatsoever. A 35,046 square-foot home on North Carolwood Drive, a 45,891 square-foot home on Bel Air Road, and a 52,503 square-foot home on S. Mapleton Drive, to name a few, were all built without the City of Los Angeles subjecting them to this procedure. It's not even the largest residential project in the area. [SOURCE: City of Los Angeles Department of City Planning, Los Angeles County Assessor's Office]

Vanity Fair reporter Michael Shnayerson recently visited the Los Angeles hillside neighborhood of Benedict Canyon to report on a proposed residential project by JMBM client Prince Abdulaziz bin Abdullah bin Abdulaziz al-Saud, Deputy Foreign Minister of Saudi Arabia. Shnayerson's article, There Goes the Neighborhood, includes interviews with some of the property's high profile neighbors and sheds light on what is really driving the opposition.

Tower Lane Properties, Inc., the prince's entity seeking to build the project, has reached out to the surrounding community, heard the community's issues and concerns, and has come forward with new, revised plans that reduce the project's size and significantly reduce project-related truck traffic. Tower Lane Properties, Inc. is committed to maintaining an open and ongoing dialogue with area neighbors to ensure that this residential development on private property can move forward.

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About the Authors

Benjamin M. Reznik

Ben Reznik is the founder and chair of the Government, Land Use, Environment and Energy Department at Jeffer Mangels Butler & Mitchell LLP. Ben's practice emphasizes real estate development entitlements, zoning and environmental issues. He appears regularly before planning commissions, city councils and other governmental boards and agencies, as well as the courts. Ben and his work have been featured in the Los Angeles Times and the Los Angeles Business Journal, and he has been included in the Los Angeles Daily Journal as one of California's "Top 100" lawyers. Ben leads a group of distinguished attorneys whose work has resulted in JMBM's inclusion in the U.S. News & World Report / Best Lawyers® list of Best Law Firms (2011, 2012, 2014, 2015) with a National First-Tier Ranking and a Metropolitan First-Tier Ranking (Los Angeles) in the area of Land Use and Zoning Law. Contact Ben at BMR@jmbm.com or 310.201.3572.

Kerry Shapiro

Kerry Shapiro has a comprehensive government, land use, environmental, and natural resources practice, with extensive experience working with NEPA, CEQA, the Endangered Species Acts, the Mining Law of 1872, FLPMA, the Mineral Materials Act, SMARA, and the Clean Water Act, in relation to various entitlements and public land matters and related litigation, at federal, state, and local levels. Kerry has also specialized in representing the construction and building materials industry on mineral extraction and land development projects for over 20 years, and has secured entitlements for the largest federally-approved sand and gravel project in the United States, obtained the first-ever vested rights confirmation from the State of California for the largest construction aggregate deposit in California, and successfully represented clients before the Ninth Circuit Court of Appeals on federal endangered species and mining law matters. Contact Kerry at KShapiro@jmbm.com or 415.398.8080.

Sheri Bonstelle

Sheri Bonstelle's practice focuses on land use, zoning, environmental, litigation and construction matters. She manages all aspects of the entitlement process, including representing clients before local and state agencies, commissions and councils. She coordinates environmental review under the California Environmental Quality Act (CEQA) and National Environmental Protection Act (NEPA) and obtains permits and approvals necessary under the Clean Water Act, Clean Air Act, Endangered Species Act, California Coastal Act, and historic preservation laws. She also negotiates participation and development agreements with the Community Redevelopment Agency, and obtains approval of adaptive reuse projects in historic buildings in Los Angeles. She coordinates land use and environmental diligence review for large multi-property portfolio sales and represents signage companies and building owners with respect to preserving signage rights in Los Angeles. Sheri is a licensed architect in the State of New York. Contact Sheri at SBonstelle@jmbm.com or 310.712.6847.

Neill Brower

Neill Brower represents JMBM's clients in environmental and land use issues, including permitting and regulatory compliance under CEQA, NEPA, CERCLA, RCRA, the Clean Water Act, and the California Fish and Game Code. Prior to his legal career, Neill worked for 10 years managing and preparing a variety of environmental and urban planning documents, including environmental impact reports and statements, archaeological and historic resources technical studies, and natural resources permit applications. He also provided peer review of planning and technical documents. During this time, Neill worked extensively with local and state agencies as clients and as regulators. Contact Neill at NBrower@jmbm.com or 310.712.6833.

Jon Welner

Jon Welner is a leading practitioner of environmental and natural resource law in California. Jon represents clients in all areas of environmental, natural resource, and land use law. His practice includes the regulation of air, water, hazardous substances, hazardous waste, radiological materials, development of contaminated properties ("Brownfields"), energy and water companies, coastal development, endangered species and other natural resources, as well as matters involving CEQA and NEPA (environmental impact reports/studies), and Prop 65. He has special expertise in conducting legal audits and developing compliance systems, and in the early transfer and redevelopment of former military bases. Jon also represents clients on prevailing wage and public contracting matters. Contact Jon at JWelner@jmbm.com or 415.984.9656.

Matthew Hinks

Matthew Hinks is a litigator with a wide-ranging practice that focuses primarily on the representation of real estate developers in difficult land use cases. Matt has extensive experience litigating complex mandamus actions and other claims involving signage disputes, governmental takings, CEQA challenges, planning and zoning law, civil rights violations, eminent domain issues, title disputes, lease disputes and community redevelopment and density bonus law. He has extensive experience in both federal and state courts, including trial courts and courts of appeal, as well as in arbitration, mediation and administrative settings. Contact Matt at MHinks@jmbm.com or 310.201.3558.

Kimberly Huangfu

Kimberly Huangfu focuses on securing and negotiating development entitlements for commercial, retail, residential, and energy projects. She represents clients in the areas of land development, land use entitlements and permitting, regulatory compliance and enforcement, and green building. She advises on a variety of environmental, zoning, and local regulations, and prepares and analyzes CEQA documents, including mitigated negative declarations and environmental impact reports. She is well-versed in the Clean Water Act, Surface Mining and Reclamation Act (SMARA), Porter-Cologne Water Quality Control Act, Endangered Species Act, Clean Air Act, and National Environmental Policy Act. Kimberly has extensive experience in complex civil litigation and appeals including validation actions, groundwater adjudications, and other administrative proceedings. She has represented private and public entities on a wide array of commercial real estate actions and other litigation involving the protection of landowner water rights, CEQA prosecution and defense actions, and eminent domain proceedings. Contact her at KHuangfu@jmbm.com or 415.984.9625.